Vietnam expects Jan-Sept economic growth to be strongest in 7 years

HANOI (Reuters) - Vietnam’s economy is estimated to have grown 6.98 percent over January-September this year, the fastest nine-month growth since 2011, buoyed by upbeat production in manufacturing and agricultural sectors, the General Statistics Office (GSO) said on Friday.

A man paints steel structures of a new factory in Hanoi, Vietnam May 30, 2018. REUTERS/Kham/Files

The Southeast Asian nation recorded strong growth in agriculture and moderate expansion in manufacturing and services in the nine-month period, while processing and manufacturing industries continued to be the main growth driver for the economy, GSO said.

The third-quarter growth rate was 6.88 percent, accelerating from the second-quarter growth of 6.73 percent, but lower than the first-quarter growth rate of 7.45 percent, GSO said.

“Growth in the first nine months showed many positive results ... but there are still many challenges especially in the background of the China-U.S. trade war,” GSO General Director Nguyen Bich Lam told a news conference on Friday.

The Vietnamese economy’s openness index is increasing very quickly, with the index in the first nine months of 2018 hitting 229.5 percent, compared with 215.9 percent in 2017 and 119.7 percent in 2016, Lam added.

The Asian Development Bank on Wednesday lowered Vietnam’s 2018 economic growth forecast for Vietnam to 6.9 percent from 7.1 percent projected previously, partly due to an ongoing trade friction between the United States and China.

The escalating trade friction between the United States and China poses a threat to Vietnam due to knock-on effects for countries such as Vietnam, which export intermediate goods to China, while weaker global demand will also act as a drag on growth prospects, research firm Capital Economics said in a report on Friday, projecting Vietnam’s growth rate to slow down from 7 percent this year to 6 percent in 2019 and 2020.

However, Lam said the trade spat has not yet affected Vietnam’s exports to the United States.

Vietnam could seek opportunities to boost exports and welcome foreign investments, while maintaining risks such as transhipment to avoid tax, similar tariffs imposed on Vietnam and global trade contraction, he added.

Trade surplus in the first nine months reached $5.39 billion, with exports rising 15.4 percent from the same period last year to $178.91 billion, while imports rose only 11.8 percent to $173.52 billion, GSO data showed.

“While we think the economy will continue to expand at a decent pace over the coming years, the rate of growth will probably slow down,” Capital Economics added.

Vietnam’s Prime Minister Nguyen Xuan Phuc said on Thursday the country’s economic growth this year could exceed target to grow 7 percent. The Southeast Asian nation last year grew 6.81 percent last year, the strongest pace since 2010, the General Statistics Office had said.